Demand for cars and trucks is on the rise, but inventory of cars and trucks is not. All that and more in The Morning Shift for April 26, 2021.
1st Gear: … And Making Bank
Car dealers across the country are struggling to fill their lots, as Automotive News lays out in a new report “Buyers aplenty, but dealers are running on empty,” detailing how demand has come up from the depths of the pandemic, but supply has not:
Vince’s GM Center is not going out of business. But the dealership’s lot in eastern Colorado is so abnormally sparse that some customers have assumed that it is.
With assembly lines at many North American factories halted because they can’t get enough microchips, and demand for new vehicles booming again, Vince Schreivogel is one of many dealers across the country disconcertingly watching their inventory wither away.
“At first, [customers] couldn’t believe we couldn’t get stuff, but then it came into reality where they went online and nobody else has it either,” said Schreivogel, who had fewer than 20 new vehicles in stock last week.
Not everyone is suffering, though, as Reuters points out that “U.S. auto dealers are winners as chip shortage lifts vehicle profits.” The report explains that dealers who are able to get vehicles in stock are selling them at whatever they like:
Mike Bowsher shakes his head in wonder when he hears yet another customer at one of his Buick-GMC dealerships near Atlanta has agreed to pay full sticker price of more than $71,000 for a top-of-the-line GMC Yukon XL Denali SUV that is still being assembled at a General Motors (GM.N) factory.
Customers know what Bowsher has arriving by scanning the online inventories of his six stores in the region, and they are often willing to wait more than a week and pay full price to get their desired vehicle.
“I’m selling about 150% of what I have on the ground,” Bowsher said. “We are selling stuff so far up in the pipeline that they’re putting money down on ‘in-process,’ which is in the plant.”
I am annoyed that even a global pandemic has not ended the dealership model entirely.
2nd Gear: Chip Report
The reason for these shortages, of course, is that there’s a global semiconductor chip shortage. The car industry stopped ordering as demand for vehicles dried up early in the pandemic;when automakers started ordering chips again, they found that the electronics industry had bought up all the supply. Whoops!
The current news is that there are shutdowns and delays across the U.S. plants, as Automotive News details:
Ford and Stellantis account for most of the nearly 80,000 vehicles taken out of North American production schedules last week as a result of the ongoing microchip shortage, according to an April 23 tally by AutoForecast Solutions.
[…]
Ford said last week that its Chicago and Flat Rock plants, as well as both the F-150 and Transit van sides of its Kansas City plant will be down the weeks of May 3 and 10 as the automaker continues to get pummeled by the semiconductor crisis.
At the same time, 30,000 Stellantis vehicles were impacted in North America, including 14,700 Jeep Grand Cherokee midsize SUVs and 5,600 Dodge Durango large SUVs (Detroit), and more than 2,200 Ram 1500 pickups (Warren, Mich.).
General Motors also took a hit. It had to cut 4,900 Chevrolet Express and 1,800 GMC Savana full-size vans (Wentzville, Mo.).
3rd Gear: Uber And Lyft Have A Driver Problem
Ride-hailing companies have operated roughly on this basic principle: The worse we treat our drivers, the better we get treated by investors. It is abundantly clear to anyone taking stock of this situation that eventually something has to give.
The current issue is that Uber and Lyft are short on drivers and somehow having a hard time attracting them back, as Business Insider reports:
Last month, the number of drivers on the road for Uber and Lyft in the US was 35% lower than where it was in January of last year, according to data from Gridwise, an app for ridehail drivers. That’s a slight improvement over the worst pandemic lows, but it gives a sense of how much work the companies still need to do to get fully up and running. Still less than two-thirds the number of pre-pandemic drivers are driving for the apps, the data shows.
Both companies are spending big to lure drivers back to the road as they see a surge in demand from riders in the US, buoyed by declining COVID-19 rates due to increased vaccinations. Uber and Lyft have launched high priced public campaigns, offering drivers incentives and short-term offers to pick up more passengers. Investors have been bullish on both companies in recent months, seeing them as strong businesses in a post pandemic economy, with growing revenue and diminishing losses. Both have started signaling to investors that they could become profitable in the near future.
But even if rider demand continues its upswing, the companies won’t be able to recover if they can’t get enough drivers. Interviews with ridehail drivers reveal a litany of worries and complaints that are keeping them from coming back onto the road. Among the key ones are safety from getting infected by passengers, but also the reliability of income.
My mom always tells a story of how many of her friends in New York in the ’70s went looking for quick and easy work became cab drivers…right up until every one of them was held up at knifepoint. None of them returned to the gig. I am sensing some parallels.
4th Gear: Going Hydrogen Isn’t Going To Be Easy For Shipping Industry
Much as we love to focus on the consumption and emissions of relatively small automobiles, a good deal of our climate catastrophe comes down to big-ass ships. Getting these things off of burning oil isn’t going to be easy, as the Financial Times details:
“This is not going to be an easy sector to decarbonise,” said Bud Darr, executive vice-president at Mediterranean Shipping Company, the world’s second-largest container shipping group. “Ocean shipping’s need for autonomy requires us to carry a large amount of fuel. We need a range of alternative fuels at scale and we need them urgently. We’re keeping an open mind and exploring all possible solutions.”
Hydrogen has low energy density compared with heavy fuel oil. Storing it in its liquid form below -253C requires heavy cryogenic tanks that take up precious space, rendering it unfeasible for large cargo ships.
“With the current state of technology, we cannot use hydrogen to fuel our vessels,” said Morten Bo Christiansen, head of decarbonisation at AP Moller-Maersk, MSC’s larger rival.
The current hip tech is using ammonia to power these ships, but nobody has quite gotten it to work and it also smells horrible.
5th Gear: French Fossil Fuel Giant Total Pulls Out Of Mozambique
Mozambique was not a French colony, but it has just kicked out its big oil company Total. Well, Mozambique’s government did not. Mozambique’s government was really quite happy with Total’s starting a $20 billion liquid natural gas project on its coast. Insurgents, as the Financial Times calls them, attacked and killed enough people to get Total to declare a force majeure and pull out of its contract. Per the FT:
The French energy major said on Monday it had activated the contractual get-out “considering the evolution of the security situation” in Mozambique’s northernmost Cabo Delgado region, where insurgents last month laid waste to a town adjacent to the $20bn project.
The attack on Palma killed dozens of people, including foreign workers, and made thousands more homeless, prompting Total to withdraw all staff from the nearby project on the Afungi peninsula.
Discoveries of vast offshore gas reserves over the past decade promised to transform the economy of one of the world’s poorest nations.
This is a somewhat confusing case, as American media has been saying that the Islamic State is behind these attacks, but BBC Africa has a good article explaining how this is not the case.
Reverse: ‘Clean’ Energy Gets PR Hit
Neutral: How Are Your Pandemic Projects?
I have two horrible bicycles in states of near-completion on my porch, making me feel like the bike equivalent of a guy with an El Camino on my lawn. What are you up to?
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